Are you planning to retire early? Get your ducks in a row


Many dream of retiring early, but few can and fewer. Your financial decisions from the start will determine whether you are able to do so. Before you embark on the journey, you should know that early retirement is not for everyone.

Some people can get bored easily without the purpose of having a job or be isolated without the social connections that come with a job. Also, keep in mind that without the benefit of a group plan, health insurance can get more expensive for retirees. So plan accordingly. So what do you have to do?

Do the math

First, you need to define what retirement means to you. If you ask five people what retirement means to them, you will get five different answers.

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Some may want to retire in their forties while others are keeping an eye on their sixties. Some people may want to retire and never go back to work, while others want to retire so they can pursue their passions without worrying about money.

Some would like to retire to a quiet and humble life while others would like to travel the world and have a luxurious lifestyle. Find out exactly what you want and expect from retirement so you can plan accordingly. Financial experts advise you to think about how much you can expect to spend each year and consider about 30 years after you retire.

Remember to take inflation into account – even modest inflation can affect your purchasing power significantly over time. Having a number in mind will help you know how much to put away each month and keep you motivated to reach your goal.

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Retirement plan

Are you saving enough to retire in comfort? Or is that just why you save? Are you even saving? Sometimes the job title with the tag “permanent and pensionable” makes it a little too convenient for you. However, you need to ask yourself whether the pension is enough to maintain the lifestyle you want.

The best way to start planning your retirement is to determine what you need for retirement. Estimate what you have on hand by assessing your current sources of income and retirement income, and calculating what you need to put aside annually to meet your goal. Write this plan in writing. Your master plan provides information about your overall financial situation and is directly related to your retirement provision.

One benefit of having a plan is to keep you informed and avoid emotional decisions that can easily affect your focus. When you feel like you lack the financial confidence to make an informed decision about your retirement investment options, perform a basic retirement calculation to get a solid estimate of how much to save. If you can save 10 percent of your income, this is a good place to start.

However, planning for early retirement can be harder than it seems. Hence, you should hire a financial advisor to point you in the right direction.

Earn in retirement

In the past, retirement was seen as a complete end to working life. For most millennials and supporters of the Financial Independence Retire Early (Fire) movement, however, retirement means they don’t have to work full-time to afford a normal lifestyle.

Simply put, retirement doesn’t mean not working or not earning. You will find that many retired Fire advocates are still making tidy bucks blogging, vlogging, podcasting, hosting webinars, part-time jobs, and other hobbies. Retirement is about leaving your company job and not having to work the regular 9 to 5 days.

The truth is, few people have what it takes to stop working altogether in their thirties and forties. You can start by starting your own business on the side or working at a side concert before quitting your 9-5 job.

The idea of ​​working into old age or until the Grim Reaper collects does not appeal to many people these days. However, studies show that most millennials may not be able to retire until they are 70 years old.

Millennials are much slower to build wealth than previous generations. They have entered the labor market during difficult economic times and have greater difficulty in finding quality jobs that offer stability and benefits such as retirement plans and health insurance.

Not having access to retirement plans at work is especially detrimental as many people struggle to save even for retirement. Many young adults also do not own homes, a valuable retirement asset, and spend a significant portion of their income on student loan repayments.

What is your dream?

If your dream of retiring early and living frugally, you can afford it if your passive income pays off well and you can live on it comfortably. You should also have a pretty nest egg for retirement. When you get to that point, knowing that you can retire is reassuring. However, this does not mean that you should be retiring.

To get here, you need to strengthen your passive sources of income so that they can be almost like active ones. Focus on non-financial goals that bring you fulfillment, such as philanthropy, spending time with loved ones, and taking care of your health.

However, if you dream of retiring in luxury, the only way to do so is when you have amassed assets, passive sources of income and savings that will allow you to retire and live in luxury for the rest of your life.